According to a report from Hu Tong Finance APP—— on Wednesday (November 27) in the Asian market morning, spot gold fluctuated slightly, currently trading around 2632.67 dollars/ ounce. Gold prices steadied on Tuesday, dipping to a one-week low of 2605.13 dollars/ounce in earlier tug-of-war as the ceasefire agreement between Israel and Lebanon softened safe-haven demand, but concerns limited the decline in gold prices, which settled at 2633 dollars/ounce on Tuesday, up about 0.29%.Gold prices fell sharply by 100 dollars on Monday, retreating from a three-week high. The optimism surrounding the ceasefire between Israel and Hezbollah intensified gold sell-off, and the nomination of Besson as Finance Minister further added pressure, weakening gold's appeal as a safe-haven asset.According to Channel 12's report on Tuesday, Israel's security cabinet has agreed to a ceasefire agreement with Lebanon.Peter Grant, Vice President and Senior Metal Strategist at Zaner Metals, stated: "This may indicate that people realize the ceasefire between Israel and Hezbollah can only slightly alleviate overall geopolitical risks, with some optimistic factors involved."Grant also added that there are still great concerns about the wider impacts of the Russia-Ukraine war, suggesting that gold may experience oscillatory consolidation in the near term, fluctuating between 2575 and 2750 dollars.The imminent risk is the commitment to impose hefty tariffs on goods from Canada, Mexico, and major Asian nations. Analysts indicated that the resulting inflation risks might hinder the Federal Reserve from cutting interest rates, thus exerting potential pressure on gold prices.Jane Foley, Head of FX Strategy at Rabobank, remarked: "I think we have a perfect example that illustrates why, under our leadership, volatility may increase. He (a leader) can make comments outside of normal trading hours in the U.S., catching everyone off guard. This leaves investors and everyone else scrambling to decipher what it actually means."The minutes from the Fed's November 6-7 meeting revealed varying views among officials about future potential rate cuts. However, they collectively decided to refrain from providing specific guidance on possible directions for U.S. monetary policy.Following the release of the minutes, short-term treasury yields dipped while interest rate futures traders slightly increased bets on a 25 basis point rate cut at the Fed's meeting next month. Data from the CME Group showed that later on Tuesday, the market estimated the likelihood of a rate cut in December at 62.8%, up from 56% earlier that day.Matt Eagan, Portfolio Manager at Loomis, Sayles & Company, commented, "Concerns over tariffs and fears of the U.S. budget deficit are factors influencing the market's view on the Fed's true ability to cut rates." "Many are optimistically viewing this merely as a negotiation tactic... the Treasury market is more or less skeptical of these comments."The U.S. dollar index surged and then retreated on Tuesday, while a rebound in U.S. Treasury yields stalled, providing some support for gold prices. The dollar index peaked at 107.55, up 0.63% upon hearing of tariff threats but closed just shy of that rise at around 106.88; technical indicators showed some signs of a top, and potential pullbacks might provide further upward momentum for gold prices.The yield on the 10-year U.S. Treasury rose by 1.1% on Tuesday but failed to recover Monday's losses, remaining near a two-and-a-half-week low at 4.325%. Some investors suggested that the uptick in yields reflects the inflation risk due to higher tariffs.On Tuesday, investors digested some economic data indicating the economy remains on solid ground. This includes data from the Federal Housing Finance Agency (FHFA) showing solid growth in U.S. single-family house prices in September, and the Conference Board's November Consumer Confidence Index that met expectations.This trading day includes several risk events; during the Asian session, the Reserve Bank of New Zealand's interest rate decision is forthcoming, with the market widely anticipating a 50 basis point rate cut, which would reduce the opportunity cost of holding gold, likely supporting its price.Secondly, in the New York session, the U.S. third-quarter GDP revision data, U.S. October durable goods orders month-on-month preliminary value, and the year-on-year PCE price index are expected, with the market sentiment leaning towards optimism, potentially placing constraints on gold prices.Additionally, since Thursday is Thanksgiving in the U.S., the initial jobless claims data, typically released every Thursday, will be announced a day earlier today.Lastly, investors should continue to monitor developments related to geopolitical tensions and any relevant updates.
The Federal Reserve meeting minutes: The Fed considers volatility and uncertainty as reasons to slow rate hikes
At a meeting held earlier this month, Fed officials seemed to have differing views on how much more they may need to lower interest rates, but as a whole, they agreed that too much specific guidance should be avoided on how U.S. monetary policy might evolve in the future.According to the minutes from the November 6-7 meeting, Fed officials pointed out that there is uncertainty regarding the direction of the economy, and the current level of interest rates may also have an uncertain degree of constraint on the economy—this is a key factor in determining how much further rates should decline—and situations are evolving, necessitating cautious action.The minutes released on Tuesday noted: "Many attending officials believed that uncertainty regarding the neutral rate level complicates the assessment of how constraining the monetary policy currently is, and they deemed it appropriate to gradually reduce policy constraints." Note: The neutral rate is the level of interest that neither stimulates nor suppresses economic activity.The minutes indicate, "Participants highlighted that monetary policy decisions are not on a pre-set path, but rather depend on the evolution of the economy and its implications for economic outlook... They stressed that it is critical for the Committee to make this clear when adjusting its policy stance."The Fed lowered its benchmark policy rate by 25 basis points to a range of 4.50%-4.75% at its meeting three weeks ago.Many participants pointed out the complexities of making policy decisions in circumstances where data are volatile due to storms, strikes, and other factors, and the geopolitical situation is highly tense.Fed officials generally agreed that inflation is largely under control, and the risk of a sharp rise in unemployment has diminished. Nonetheless, "some participants noted that if inflation remains too high, the Committee could pause in lowering policy rates and keep them at a constraining level, while others indicated that a downturn in the labor market or sluggish economic activity could accelerate rate cuts.Following the release of the minutes, financial markets slightly increased bets on rate cuts at the December 17-18 meeting while maintaining previous bets that next year's rate cuts would slow down, with expectations for only one cut by mid-year.Samuel Tombs, Chief U.S. Economist at Pantheon Macroeconomics, remarked: "We still believe that the Federal Open Market Committee (FOMC) will lower the funds rate by 25 basis points in December, but the pace of cuts will slow next year in response to a potentially complex set of policy developments." "Our baseline scenario is that the Fed will have to tread carefully in easing policy, most likely taking action at alternate meetings next year, weighing the risks between the labor market and inflation." Tombs noted, "However, the scale, timing, and likelihood of economic proposals are highly uncertain, creating considerable risks at both ends of our forecasts for the federal funds rate." Before the Fed's November meeting, a series of stronger-than-expected economic data was released, with Fed Chair Powell labeling these data as "extraordinary." This raised concerns that monetary policy might not be as restrictive as hoped with respect to economic developments.Since that meeting, officials have indicated that the continuing strength of the economy implies that the Fed's benchmark policy rate may be close to a "neutral" level, which provides a rationale for easing rates more cautiously to avoid overly loose policy that could potentially reignite inflation.Others argue that the economy may be slowing and that a continue weak job market could provide justification for relaxing financial conditions further to stimulate spending and investment.
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U.S. November consumer confidence rises to a 16-month high, while October new home sales plummet to a nearly two-year low
U.S. consumer confidence in November rose to its highest level in 16 months, driven by optimism regarding the labor market and expectations of lower inflation and rising stock prices in the coming year.The Conference Board reported on Tuesday that U.S. consumer confidence has increased for the second consecutive month, partly reflecting the impact of the November 5 results, with the Republican Party gaining control of the U.S. Congress."The growth in headline data is likely driven by the excitement among Republicans," said Samuel Tombs, Chief U.S. Economist at Pantheon Macroeconomics. "This index also saw a spike at the end of 2016 when Mr. Trump was first elected, suggesting that households surveyed by the Conference Board are more likely to lean Republican than the general population."The Conference Board stated that its consumer confidence index rose from a revised 109.6 in October to 111.7 this month, marking the highest level since July 2023.Economists surveyed by Reuters had anticipated the index to rise from a previously reported October figure of 108.7 to 111.3.Consumers aged under 35 were the main driving force behind the rise in confidence, while sentiment among those aged 35-54 slightly declined. Confidence among all income groups increased, except for those earning above $125,000 and below $15,000. 56.4% of consumers expect stock prices to rise over the next year, a record high.The average inflation expectation for the next 12 months decreased from 5.3% in October to 4.9%, the lowest since March 2020. Nevertheless, high prices remain a concerning issue for consumers, who indicate that lowering prices is their biggest wish for the coming year.The labor market differential in the survey reflects respondents' views on whether there are many or few job opportunities, widening from 16.5 in October to 18.2 this month.This indicator correlates with the unemployment rate in the Department of Labor's monthly employment report, and optimism regarding future job opportunities has reached its highest level in nearly three years. Economists are concerned about the decrease in consumers planning to purchase big-ticket items like cars and refrigerators.Plans to buy homes in the next six months dropped significantly, which may reflect the rise in mortgage rates and continuous increases in home prices. Another report from the Federal Housing Finance Agency showed that after a 0.4% increase in house prices in August, prices rose by an additional 0.7% month-on-month in September.By the end of October, the average rate on a 30-year fixed mortgage jumped to 6.72%, up from a 6.08% low in September when the Fed began to cut rates.The third report from the U.S. Census Bureau indicated that the reversal in mortgage rates and the impact of hurricanes affected the sales of new single-family homes, which plummeted 17.3% in October, with the seasonally adjusted annual rate falling to 610,000 units, the lowest level since December 2022.New home sales in October were down 9.4% year on year. The median price of new homes increased by 4.7% year on year, reaching $437,300. The inventory of new homes rose from 471,000 units in September to 481,000 units, the highest level since early 2008, which could suppress new home construction.At the sales pace from October, the supply of homes on the market will take 9.5 months to clear, compared to 7.7 months in September.
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